The action claims that Genesis' crypto earn products were actually unregistered securities, a position shared by the U.S. Securities and Exchange Commission.
Bankruptcy attorneys for crypto lender Genesis believe a deal with major creditors can be reached within the week. But that wasn't fast enough for one group of customers, who have filed a class action lawsuit accusing the firm of violating securities regulations.
The lawsuit accuses Genesis Global Capital's parent company Digital Currency Group — and its CEO Barry Silbert — of selling unregistered securities in the form of the crypto lending product it offered through Gemini Earn accounts, among other channels.
It also accused the firm and its CEO of "securities fraud through a scheme to defraud prospective and current digital asset lenders" by intentionally misrepresenting the condition of Genesis Global's finances, the law firm Silver Golub & Teitell said in a statement.
"The scheme to defraud was carried out ... in order to induce prospective digital asset lenders to loan digital assets to Genesis Global Capital and to prevent existing lenders from redeeming their digital assets."
Genesis attorney Sean O'Neal told a federal bankruptcy court in New York on Monday that he believed a settlement with creditors could be reached within a week and without mediation.